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Global gold prices firm as US healthcare vote delay weighs on stocks, dollar

LiveMint logoLiveMint 28-06-2017 Vijaykumar Vedala

Bengaluru: Gold prices firmed on Wednesday as the dollar struggled and shares weakened after a vote on US healthcare reforms was postponed and European Central Bank (ECB) President Mario Draghi hinted the ECB could trim its stimulus this year.

Asian shares slumped on Wednesday after Wall Street was knocked hard as US Senate Republican leaders delayed a vote on a healthcare overhaul on Tuesday until next month, adding to investor worries about President Donald Trump’s ability to deliver on his promises of tax reform and deregulation.

The dollar index, which weighs the greenback against a basket of six currencies, slipped to 96.322 on Wednesday, its lowest since November.

Spot gold rose 0.4% to $1,251.91 per ounce by 9.38am.

US gold futures for August delivery was up 0.5% to $1,252.50 per ounce.

“Gold prices recovered from most of the sudden plunge in prices earlier this week, with huge volumes being bought on the open in Europe,” ANZ said in a note.

“These gyrations point to erroneous trades, with little macro-events inducing such volatility. In the end, gold is back where it all started at around $1,250/oz,” it added.

The precious metal slid 1% on Monday as a large sell order hit sentiment, though losses were limited by political uncertainty around the world.

“The dollar and the equities are on the back foot at the moment, providing a little support to gold,” a Sydney-based trader said.

Wall Street’s volatility index, which measures implied volatility of stock options and is often seen as an investor fear gauge, rose nearly 12% on Tuesday providing some additional support, the trader added.

Gold is used as an alternative investment during times of political and financial uncertainty.

On Tuesday, Draghi opened the door to tweaks in the ECB’s aggressive stimulus policy, fuelling market expectations that the central bank will announce a reduction of stimulus as soon as September.

Among other precious metals, spot silver gained 0.7% to $16.78 an ounce.

Silver is biased to revisit its 14 December 2015 low of $13.60 per ounce over the next three months, as suggested by its wave pattern and a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao.

Platinum rose 0.6% to $921.60 and palladium edged up 0.4 percent at $860.78. Reuters

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